HALLOWELL — How does an $8,000 bond deficit turn into a $96,000 surplus in a month’s time?

The answer: When a revised project expense is not factored into the equation.

That appears to be what has happened in Hallowell, whose city officials last month heard from City Manager Nate Rudy that there was an $8,000 deficit projected in the $2.36 million bond that had been issued in 2017 for various projects.

On Wednesday, however, Rudy told the City Council’s Finance Committee the city’s scope of work for the Water Street reconstruction project was reduced from original estimates of about $625,000 to about $521,000.

He said this takes the projected $8,000 deficit to a $96,000 surplus, which can be used for projects that fit under the categories listed in the bond.

“I am really relieved to know that I jumped on a grenade that still had a pin in it,” Rudy said.

In April 2017, Hallowell residents voted 563-355 to approve the $2.36 million bond. It had six components:

• $625,000 for the recently completed Water Street reconstruction project.

• $600,000 for infrastructure improvements at Stevens Commons.

• $535,000 for rural road maintenance.

• $300,000 to improve parking downtown.

• $220,000 to restore the fire station’s historic tower.

• $80,000 for city building maintenance.

At the Jan. 14 City Council meeting, Rudy apologized for giving the City Council “bad guidance” on where the city stood with the $2.36 million bond issue that was approved by voters in April 2017, adding he previously thought the city would under the bond’s limit after completing the necessary projects.

He said $355,205 was left on the $2.36 million bond, which was $8,289 less than the projected $363,494 the city still owed to the Maine Department of Transportation for the Water Street reconstruction project.

“I have been reviewing the register and I don’t know how I went from feeling confident that there was more than enough money in the account to pay for the road project to our currently identified projected deficit, however small it may be,” Rudy said Jan. 14. “I was wrong and I’m sorry.”

Rudy said Wednesday he did not know exactly what part of the city’s portion was cut for the project, but that it may have included pedestrian amenities or bump outs.

George Lapointe, chairperson of the Finance Committee, said the City Council, at the time the bond was issued, may have built in some wiggle room to mitigate the risk of running a deficit.

MDOT Project Manager Ernie Martin was not available Thursday for comment.

The Finance Committee, which includes Lapointe, Kate Dufour and Maureen Aucoin, discussed the potential of allocating some of the surplus funds for maintenance at the aging City Hall.

A document included with Wednesday’s meeting’s agenda said wall and ceiling damage need be fixed, the Second Street entrance may need updating and doorways could be weatherproofed.

It also floated the idea the money could be used to pave the Central Street parking lot or to supplement budgeted funds for culvert projects on rural roads.

The reconstruction of Water Street, which had a prominent crown in the middle of the road, started in April 2018 and was completed in May 2019.

The bond situation is the third high-profile financial question that has arisen in Hallowell since November 2018, when a budget error — amounting to hundreds of thousands of dollars — held up that fiscal year’s budget. In May 2019, Hallowell officials said they were confident in the city’s staff after more than $200,000 was not sheltered properly because it was not properly assessed as being in a tax increment financing district.

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